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Sunk by rescue packages

Madeleine Dyer on the sale & leaseback schemes that can result in eviction

March 20 2008, 12:00am, The Times

Increasing numbers of homeowners are using sale-and-leaseback schemes as a way out of mortgage arrears. In theory, the schemes allow homeowners in financial difficulty to sell their property and then rent it back, so they can avoid the stress and strain of eviction.

But a look at how these schemes work in practice tells a different story. According to Citizens Advice, such schemes are responsible for householders selling their property at prices below market value. Moreover, the landlord can issue a tenancy agreement for as little as six months and then, at the end of that period, try to raise the rent. If newly made tenants cannot pay the rent, they risk becoming homeless.

The principle of sale and leaseback originated in the commercial property…